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October 2021


Notes & Trends – October 2021

CRIMINAL LAW

JUDICIAL LAW

• 2nd Amendment: Permit to carry statute does not violate 2nd Amendment. Appellant challenges his conviction for carrying a pistol in a public place without a permit, arguing that the statutory permit requirement violates the 2nd Amendment. Applying strict scrutiny, the Supreme Court finds that the carry permit statute serves the government’s compelling interest in protecting the general public from gun violence. The statute is also narrowly tailored to serve that interest, because it is not difficult under the statute to obtain a permit to carry. A sheriff must issue a permit upon receiving an application, unless a narrow exception applies, and the statute provides for circumstances under which a permit is not required to carry or possess a pistol. Appellant’s conviction is affirmed. State v. Hatch, A20-0176, 962 N.W.2d 661 (Minn. 8/24/2021).

•  Property damage: “Cost of repair or replacement” includes reasonable estimates. Appellant attempted to break into the front door of a home from which she had previously been evicted, causing damage to the door, frame, and lock. The homeowner received a repair estimate of nearly $1,600. Appellant was convicted by a jury of first-degree criminal damage to property, and the court of appeals affirmed.

Appellant challenges the sufficiency of the evidence supporting her conviction, specifically whether the estimated costs of repairs the homeowner received were adequate. Minn. Stat. §609.595, subd. 1(4), criminalizes intentionally damaging another’s physical property without consent if “the damage reduces the value of the property by more than $1,000 measured by the cost of repair and replacement.” “Value” and “cost” are not defined in the statute. Looking to the dictionary definitions, the Supreme Court notes that both incorporate the “price” of goods and services, which the Court finds “consistent with an objective measurement based on the fair market value of an item or service, which need not be solely limited to the price actually paid for an item or… services…” Therefore, the Court holds that “evidence of estimates may be used to establish the ‘cost of repair and replacement’.” 

The state here presented sufficient evidence to support appellant’s conviction and her conviction is affirmed. State v. Powers, A19-1856, 962 N.W.2d 853 (Minn. 8/4/2021).

• Accomplice after the fact: An accomplice after the fact to a crime with a maximum sentence of life imprisonment may be sentenced to a maximum of 20 years. Appellant pleaded guilty to aiding a person whom she knew committed murder, specifically first-degree murder, as an accomplice after the fact. The district court imposed a sentence of 48 months, but appellant argues the sentence is unlawful. An accomplice after the fact to certain crimes, including first-degree murder, may be sentenced to no more than one-half of the maximum sentence for the crime they aided. Minn. Stat. §609.495, subd. 3. However, for first-degree murder, which carries a maximum sentence of life imprisonment, there is no ascertainable “half.” 

The court of appeals finds that the Legislature addressed this issue in the context of sentences for attempting crimes punishable by life imprisonment. Minn. Stat. §609.17, subd. 4(1), states that when a person attempts to commit a crime for which the maximum sentence is life imprisonment, that person may be sentenced to not more than 20 years. The court finds that this section supports an inference that a maximum sentence of 20 years also applies in the context of an accomplice after the fact. Appellant’s sentence is affirmed. State v. Miller, A21-0221, 2021 WL 3611467 (Minn. Ct. App. 8/16/2021).

• Postconviction: Two-year time limit runs from date new retroactive rule of law is announced. Between February 2014 and December 2015, four drivers were convicted of felony DWI test refusal after they refused warrantless blood or urine tests. In 2016, the U.S. Supreme Court decided Birchfield v. North Dakota, and the Minnesota Supreme Court decided State v. Thompson and State v. Trahan, creating the new “Birchfield rule”: Warrantless blood and urine test refusal convictions under Minnesota’s test refusal statute are unconstitutional. In 2018, the Minnesota Supreme Court determined that the Birchfield rule was a new rule that applied retroactively. All four drivers filed postconviction petitions in 2019, arguing the Birchfield rule rendered their convictions unconstitutional and that, because the Birchfield rule was announced as a new rule that applies retroactively in 2018, their petitions were timely because they were filed within two years of that 2018 decision. The district courts in all four cases dismissed the petitions as untimely, but the court of appeals reversed.

The Supreme Court holds that a postconviction petition asserting a claim for relief based on a new, retroactive interpretation of law, under Minn. Stat. §590.01, subd. 4(c), must be filed within two years from the date the appellate court announces an interpretation of law that forms the basis for a claim that the interpretation is a new rule of law that applies retroactively to the petitioner’s conviction. Section 590.01, subd. 4(c), provides that a postconviction petition filed under the retroactive new interpretation of law provision must be filed within two years from “the date the claim arises.” Prior case law has determined that this time limit begins to run when a petitioner “knew or should have known” that the claim arose—that is, when the petitioner knew or should have known of the information that would allow him to assert such a claim.

Here, the drivers all claim the Birchfield, Thompson, and Trahan decisions announced a new retroactive rule of law. Those decisions were made in 2016, and all the drivers’ postconviction petitions were file more than two years later. The Court did not announce that the Birchfield rule applied retroactively until 2018, but the decisions themselves that gave rise to the drivers’ claims under section 590.01, subd. 4(c), were issued in 2016. The court of appeals is reversed. Aili v. State, A20-0205, 2021 WL 3641771 (Minn. 10/18/2021).

• 14th Amendment: Juror glaring at prosecutor was a race-neutral reason for a peremptory strike and not a pretext for discrimination. Appellant was charged with criminal sexual conduct. During jury selection, the state peremptorily struck the only non-white prospective juror in the jury pool, R.L. Appellant raised a Batson challenge, but the state claimed R.L. was struck because R.L. had been “flagged” by law enforcement, R.L. was 20 years old, and R.L. “glared” at the prosecutor. The district court overruled appellant’s Batson challenge. After the jury ultimately found appellant guilty, he appealed his convictions and sentences, arguing the district court erred in overruling his Batson challenge. The Minnesota Court of Appeals agreed.

Under the equal protection clause and Batson, a peremptory strike cannot be used to remove a prospective juror because of race. A three-step process is followed to determine if the use of a peremptory strike violates this rule, which is codified in Minn. R. Crim. P. 26.02, subd. 7(3)(a)-(c): (1) The objecting party must make a prima facie showing of racial discrimination; (2) the striking party must articulate a race-neutral explanation for the strike; and (3) the court must determine whether the objecting party has shown a racially discriminatory motivation by the striking party and if the striking party’s proffered explanation was merely a pretext for discrimination.

Step one was satisfied here. As for step two, age and demeanor can be valid, race-neutral explanations. However, the Supreme Court agrees with appellant that the state’s reliance on the law enforcement “flag” is not sufficient, because the state did not offer any explanation as to why R.L. was flagged.

But the Court finds that the juror’s demeanor toward the prosecutor was a sufficient race-neutral reason for striking the juror and that it was not merely a pretext for discrimination. Appellant did not argue before the district court that R.L. was not glaring at the prosecutor, so the record is void of any evidence that the strike was racially motivated. Thus, the district court did not err in its ultimate denial of appellant’s Batson challenge. State v. Lufkins, A19-1809, 2021 WL 3641446 (Minn. 10/18/2021).

• 5th Amendment: Incriminating statements made during court-ordered sex offender treatment are admissible if the privilege against self-incrimination is not invoked. Appellant was on probation and required to participate in sex offender treatment. Part of that treatment included a mandatory polygraph examination, during which appellant confessed to a polygraph examiner that he had abused his former girlfriend’s young daughter. He made similar statements during the treatment process to a probation officer. He was charged with criminal sexual conduct and sought to suppress the statements made to the probation officer and polygraph examiner. The district court suppressed the statements, finding them coerced. The court of appeals reversed, because appellant never asserted his 5th Amendment privilege. 

The protection of the 5th Amendment generally must be asserted by a witness being asked incriminating questions. However, the “penalty exception” prohibits the government from depriving a person of his free choice to admit or deny incriminating information, or to refuse to answer potentially incriminating questions. As this exception applies to appellant, the question is whether his probation requirements “merely required him to appear and give testimony about matters relevant to his probationary status or… went further and required him to choose between making incriminating statements and jeopardizing his conditional liberty by remaining silent.”

The Supreme Court first concludes that appellant’s probation conditions did not allow him to refuse to provide the incriminating statements to the probation officer and polygraph examiner. The conditions required full participation in the treatment program, which itself required full and complete disclosure of sexual behavior. However, the “penalty exception” does not apply, because revocation of appellant’s probation would not have been automatic had he refused or failed to complete the polygraph and treatment. Under Minn. Stat. §609.14, and prior case law, revocation was only a possibility, following a discretionary process.

The Court also finds that Minn. Stat. §634.03 does not require suppression of the statements. This section states: “[A] confession [cannot] be given in evidence against the defendant…when made under the influence of fear produced by threats.” The Court clarifies that section 634.03 was meant to codify the common law rule that courts “should exclude confessions made under circumstances where the inducement to speak was such that it is doubtful that the confession was true.” Section 634.03 does not apply to the circumstances of this case. The court of appeals is affirmed. State v. McCoy, A20-0485, 2021 WL 3745551 (Minn. 8/25/2021).

•  Procedure: Judge’s affirmative acts in investigating, sharing, and relying on extrinsic facts disqualified the judge. Appellant was charged with domestic assault. At sentencing following his plea to an amended charge of disorderly conduct, the district court ordered that appellant comply with a DANCO during probation. The probationary DANCO was signed by the judge after the hearing and not served personally on appellant in court. During his probation, appellant was charged with violating the DANCO. Appellant moved to dismiss the DANCO violation charge, claiming he never received a written copy of the order. The district court stated that the court’s clerks always e-file DANCOs and mail copies to defendants, insisted that court administration did in fact mail a copy of the DANCO to appellant, and suggested that a clerk could testify to these facts. After the court denied appellant’s motion to dismiss, the state noted that it may amend its witness list to include a court clerk. Appellant moved to remove the judge for bias, based on the judge’s claimed knowledge of a disputed fact and that the judge had contacted a potential witness from court administration. Exhibits filed by appellant thereafter showed internal messages between the judge and a court clerk discussing service procedures for the DANCO, as well as messages between a court clerk and court operations associate concerning the same, and messages between court clerks about procedures and the possibility of testifying about them. The assistant chief judge of court denied appellant’s motion to disqualify after a hearing. After a jury trial, appellant was found guilty of violating the DANCO and he appealed. The Minnesota Court of Appeals affirmed, finding insufficient grounds to disqualify the district court judge.

The Supreme Court finds that the district court judge was disqualified in this case, pointing to several of the judge’s actions that would lead “a reasonable examiner [to] question the judge’s impartiality”: investigating the service procedures used by court administration, communicating the conclusions drawn from that investigation, relying on these conclusions in denying appellant’s motion to dismiss, and suggesting the state call a clerk to testify. While a judge is presumed to be able to set aside outside knowledge and decide issues solely on the merits, here the judge actively investigated, announced to the parties, and relied on facts related to an essential element of the charge against appellant.

The Court rejects an implication from the court of appeals decision that a jury trial cures the error of a judge presiding over a case from which the judge is disqualified, because the criminal procedural rules and rules of judicial conduct are clear that a disqualified judge must not preside over any proceeding in which their impartiality can reasonably be questioned.

When judicial impartiality is questioned, in deciding whether reversal is necessary, the Court considers “the risk of injustice to the parties…, the risk that the denial of relief will produce injustice in other cases, and the risk of undermining the public’s confidence in the judicial system…” The Court notes, however, that in certain cases, reversal may be necessary on the sole basis of impartiality arising from an affirmative act by the judge that risks undermining the public’s confidence in the judicial process in a significant way. In this case, the district court judge’s affirmative actions created such a significant risk. The case is remanded to the district court for reconsideration of appellant’s motion to dismiss before a new judge and, if the motion is denied, for a new trial. State v. Malone, A19-1559, 2021 WL 3745547 (Minn. 8/25/2021).

•  Sentencing: A “statement by the Legislature” showing intent to abrogate the amelioration doctrine must be an express declaration in an enacted statute. Appellant was sentenced for criminal sexual conduct offenses in February 2019. He was assigned a custody status point in his criminal history score for committing the acts while on probation for a 2015 felony conviction. In January 2019, the Guideline Commission submitted proposed modifications to the sentencing guidelines, including the elimination of guideline 2.B.2.a(4), under which appellant was assigned the custody status point. The proposal also declared that the modifications would only apply to crimes committed on or after 8/1/2019 and recommended that the Legislature amend Minn. Stat. §244.09, subd. 11, “to clarify that August 1 Guidelines changes will apply to crimes committed on or after that date.” The modifications became automatically effective on 8/1/2019, per statute, due to the Legislature’s failure to act in response to the proposal. Appellant argued on appeal that the amelioration doctrine should be applied to reduce his criminal history score, based on the 2019 elimination of 2.B.2.a(4). The court of appeals agreed and remanded for resentencing under the modified guidelines.

“The amelioration doctrine applies an amendment mitigating punishment to acts committed prior to that amendment’s effective date, if there has not been a final judgment reached in that case.” An amended criminal statute applies to crimes before its effective date if: (1) There is no statement from the Legislature clearly establishing an intent to abrogate the amelioration doctrine, (2) the amendment mitigates punishment, and (3) final judgment has not been entered when the amendment takes effect. At issue here is only the first part of this test. 

The Supreme Court agrees with appellant that there was no clear statement from the Legislature here. Only an express declaration or indication from the Legislature in an enacted statute is sufficient to establish legislative intent to abrogate the amelioration doctrine. The statement in guideline 3.G.1 indicating that modifications to the guidelines “apply to offenders whose date of offense is on or after the specified modification effective date” is not an express statement from the Legislature, as it was adopted in 1986 without legislative action and is not part of an enacted statute. Similarly, the Legislature did not take any action on the statement in the proposed 2019 modifications that the modifications should apply to only crimes committed on or after 8/1/2019. Such inaction is insufficient. The court of appeals is affirmed. State v. Robinette, A19-0679, 2021 WL 3745545 (Minn. 8/25/2021).

Samantha Foertsch
Bruno Law PLLC
samantha@brunolaw.com

Stephen Foertsch
Bruno Law PLLC
stephen@brunolaw.com

 

EMPLOYMENT & LABOR LAW

JUDICIAL LAW

• FELA; third appeal dismissed. An employee who brought a claim under the Federal Employers’ Liability Act (FELA) after he was injured in a car accident while working for the railroad had his third appeal of a trio of summary judgment dismissals rejected after the Minnesota Court of Appeals held that it was within the trial judge’s discretion to exclude certain expert witness reports that were necessary in order to form a foundation for his claim and, without those experts, summary judgment was appropriately granted, based upon his failure to establish a breach of duty by the employer in failing to maintain a driver’s seat recliner mechanism. Mead v. BMSF Ry. Co., 2021 WL 1846592 (Minn. Ct. App. 5/22/2021) (unpublished). 

• Nursing license suspension; board rescission of stipulation upheld. The rescission by the Minnesota Board of Nursing of a stipulation and consent order and the indefinite suspension of a nurse’s license were upheld after a toxicology screening report showed that the nurse’s sample tested positive for drugs. The appellate court upheld the ruling on grounds that there was substantial evidence supporting the rescission of the stipulation that occurred prior to the drug testing. Williams v. Minnesota Board of Nursing, 2021 WL 1847172 (Minn. Ct. App. 5/10/2021) (unpublished). 

• Unemployment compensation; three denials upheld. The Minnesota Court of Appeals denied a trio of unemployment compensation claims based upon disqualifying “misconduct.” A pharmacy technician who was fired after she refused to comply with her employer’s request that she undergo a background check by a licensing agency was denied benefits. The appellate court affirmed a decision by the unemployment law judge (ULJ) with the Department of Employment & Economic Development (DEED) that the employee was disqualified because she failed to comply with a “reasonable” requirement. Lentz v. Fairview Health Services, 2021 WL 2412919 (Minn. Ct. App. 6/14/2021) (unpublished). 

An employee who read and copied a private journal, shouted at her co-worker, and discussed an ongoing investigation was deemed to be disqualified from unemployment benefits from the City of St. Paul. DeVora v. City of St. Paul, 2021 WL 1605140 (Minn. Ct. App. 4/26/2021) (unpublished). 

An employee who was fired for repeatedly harassing a co-worker was denied benefits based upon substantial evidence showing that he made inappropriate comments, some of which were sexual in nature. The appellate court affirmed the decision by the ULJ that the employee’s behavior made him ineligible for unemployment compensation. Thomas v. Thermo Tech, 2021 WL 1846568 (Minn. Ct. App. 5/10/2021) (unpublished). 

• Noncompete contract; jurisdiction, venue dispute moot. The dismissal of a lawsuit over settlement of a noncompete dispute brought in Missouri was vacated. The 8th Circuit Court of Appeals deemed the case moot because the former employer that brought the lawsuit against an ex-employee and their new employer agreed to submit to jurisdiction and venue in Delaware in a parallel lawsuit. Panera, LLC v. Dobson, 999 F.3d 1154 (8th Cir. 6/8/2021).

Marshall H. Tanick
Meyer, Njus & Tanick
mtanick@meyernjus.com

ENVIRONMENTAL LAW

JUDICIAL LAW

• U.S. district court vacates Navigable Waters Protection Rule; WOTUS reverts to pre-2015 definition. On 8/30/2021, the U.S. District Court for the District of Arizona remanded and vacated the Navigable Waters Protection Rule (NWPR) in the case of Pascua Yaqui Tribe v. U.S. Environmental Protection Agency. The court granted the U.S. Environmental Protection Agency’s (EPA) and U.S. Army Corps of Engineers’ (USACE) motion for voluntary remand while the agencies work to revise or replace the NWPR and redefine “waters of the United States” (WOTUS).

The NWPR was promulgated in April 2020 in response to Executive Order 13778, issued on 2/28/2017. The executive order directed the agencies to review and rescind the 2015 Clean Water Rule, and to issue a new rule “interpreting the term ‘navigable waters’… in a manner consistent with” Justice Scalia’s opinion in Rapanos v. United States, 547 U.S. 715 (2006); Justice Scalia concluded that WOTUS included only relatively permanent, standing, or continuously flowing bodies of water forming geographic features described in ordinary parlance as streams, oceans, rivers, and lakes, and did not include intermittent or ephemeral channels, or channels that periodically provided drainage for rainfall. Prior to the NWPR, the 2015 Clean Water Rule aligned with Justice Kennedy’s concurring opinion in Rapanos, which held that Clean Water Act (CWA) jurisdiction would extend to waterways with a “significant nexus” between the wetland and the other traditional navigable water, a broader interpretation than that espoused by Justice Scalia. Id. at 780. On 6/9/2021, in response to Executive Order 13990, issued on 1/20/2021—which specifically revoked Executive Order 13778—the agencies announced their intent to revise the definition of WOTUS and review and replace the NWPR.

In vacating the NWPR, the district court held that the NWPR has “fundamental, substantive flaws that cannot be cured without revising or replacing…” and that “remanding without vacatur would risk serious environmental harm.” The court based this decision on the fact that the NWPR would significantly reduce the numbers of waters under CWA jurisdiction and projects that would have required Section 404 permitting compared to previous rules and practices. Specifically regarding Arizona and New Mexico, the court noted that “nearly every one of over 1500 streams assessed under the NWPR were found to be nonjurisdictional—a significant shift from the status of streams under both the Clean Water Rule and the pre-2015 regulatory regime.”

The EPA has since issued a statement that the agencies have received the district court’s order and have halted implementation of the NWPR. Furthermore, the agencies are now interpreting WOTUS under the pre-2015 regulatory regime. Until further notice, the agencies indicated they will define and interpret WOTUS to mean: 1) all waters used in interstate or foreign commerce, including all waters subject to the ebb and flow of the tide; 2) all interstate waters, including interstate wetlands; 3) all interstate lakes, rivers, and streams that could affect interstate or foreign commerce; 4) all impoundments of waters defined as waters of the United States; 5) all tributaries of waters identified above; 6) the territorial seas; and, 7) all wetlands adjacent to waters identified above.

In addition to this, the agencies will rely on clarifying guidance developed in 2008 following Rapanos v. United States, 547 U.S. 715 (2006) and guidance developed in 2003 regarding Solid Waste Agency of Northern Cook County v. USACE, 531 U.S. 159 (2001).

On 6/9/2021 the agencies announced their intent to propose a rule to restore the regulations defining WOTUS under the pre-2015 regulatory regime, and to pursue a second rulemaking process that would further refine and build upon that regulatory foundation. Pascua Yaqui Tribe v. U.S. Environmental Protection Agency, 2021 WL 3855977.

• Minnesota Court of Appeals affirms MPCA’s Enbridge Line 3 section 401 certification. In late August the court of appeals issued an unpublished opinion affirming the MN Pollution Control Agency’s (MPCA) issuance of a section 401 certification under the federal Clean Water Act, 33 U.S.C.S §1341, for Enbridge’s Line 3 replacement project.

This issue was brought before the court of appeals by Red Lake Band of Chippewa Indians, White Earth Band of Ojibwe, Sierra Club, Honor the Earth, and Friends of the Headwaters. These relators challenged the decision by MPCA to issue a section 401 certification under the federal Clean Water Act to Enbridge Energy Limited Partnership for the Line 3 replacement project. The relators argued that the section 401 certification was based on legal error “because (1) the MPCA failed to consider alternative routes for the pipeline, (2) the MPCA improperly determined that the project would comply with state water-quality and wetlands standards, (3) the MPCA improperly limited the scope of its authority under section 401 to discharges and construction impacts, and (4) the MPCA improperly shifted the burden of proof to Relators.”

After first opining that the issue before it was not moot, the court determined that the MPCA’s decision was not affected by legal error and did not lack substantial support in the record. In addressing the issues brought forth by the relators, the court first found that the MPCA did not err by only taking into consideration the route approved by the MN Public Utilities Commission (PUC) in determining whether to issue a section 401 certification. The court determined that in applying the plain meaning of the language of the applicable rules, feasible alternative routes to the proposed pipeline do not include routes that are not authorized by the PUC. The court found that as the sole authority to authorize a pipeline route, the PUC’s routing permit issued for Line 3 on 5/1/2020 provided for the only authorized route and no other route would be “legal.” Thus, there was no failure by the MPCA in not considering alternative routes for the pipeline.

The court next addressed the issue of the MPCA’s determination that the Line 3 project would comply with state water-quality and wetlands standards, ultimately finding that the MPCA’s determination was not legally erroneous or without substantial support in the record. The court first found that based on the reading of the applicable rules for section 401 certification, the MPCA was not required to use a specific method in analyzing the environmental impact of a project for section 401 certification. The court opined that, given the fact that no such specific form of review is dictated, how the MPCA performs such review is subject to judicial deference, and as such, the court shall defer to MPCA’s reasonable judgment with respect to the manner of its review. 

The court further reasoned that with regard to compliance with state wetlands standards, the MPCA’s determination was supported by the record due to the fact that (i) the MPCA was not required to consider unapproved routes as a way for Enbridge to avoid wetlands; (ii) the MPCA included several conditions in the final section 401 certification that address required regulatory factors to mitigate the project’s impact on affected wetlands; and (iii) the compensatory mitigation plan provided by Enbridge to MPCA was adequate under the applicable rules.

In addressing the MPCA’s limitation of the scope of its authority under section 401, the court opined that because relators did not adequately explain how the MPCA restricted its jurisdiction, and because the MPCA’s final section 401 certification addressed both construction and post-construction requirements, the MPCA had not improperly limited its scope of authority.

Finally, in addressing the improper shift of the burden of proof to the relators, the court stated that the only instance when the burden of proof was shifted to the relators occurred when the relators sought a contested-case hearing and thus became the party proposing the action. The court found that as the party proposing the action of having a contested-case hearing, the burden of proof was properly placed on the relators. The relators offered no other instances in which the burden of proof was improperly shifted from Enbridge to relators. In re Enbridge Energy, No. A20-1513, 2021 Minn. App. Unpub. LEXIS 727 *; 2021 WL 3853422 (8/30/2021).

ADMINISTRATIVE ACTION

• OAH Invalidates MPCA policy on whole effluent toxicity as unadopted rule. In July Judge Eric Lipman of the Minnesota Office of Administrative Hearings (OAH) granted the petition of American Crystal Sugar Company (ACSC) seeking an order that the Minnesota Pollution Control Agency (MPCA) is attempting to enforce a policy concerning whole effluent toxicity (WET) as if it were a duly adopted rule. Judge Lipman concluded that MPCA’s policies of (a) prohibiting acute WET mixing zones (AWMZs) outside of the Lake Superior Basin (LSB), and (b) requiring dischargers outside the LSB to meet 1.0 TUa at “end of pipe” (without the option of meeting 0.3 TUa at the edge of an approved mixing zone, as is allowed under MPCA’s mixing zone and WET rules applicable in the Lake Superior Basin, see Minn. R. 7052.0210 & 7052.0240) are inconsistent with the relevant regulatory language and constitute illegal unadopted rules. Accordingly, Judge Lipman ordered the following: “Until such time as the agency is authorized by a statute or rule to prohibit the use of acute mixing zones outside of the drainage basin of Lake Superior, the agency shall not prohibit the use of mixing zones to demonstrate compliance with acute toxic unit standards.” The ruling has potential ramifications for the numerous NPDES/SDS permits issued by MPCA that have WET testing requirements or WET effluent limitations; generally, MPCA has based these permit provisions on its now-invalidated WET policy of requiring dischargers to meet 1.0 TUa at end-of-pipe. In the Matter of the Petition of American Crystal Sugar Company, OAH 8-2200-37302 (7/22/2021).

Jeremy P. Greenhouse
The Environmental Law Group, Ltd.
jgreenhouse@envirolawgroup.com
Jake Beckstrom 
Vermont Law School, 2015
jbmnusa@gmail.com 
Erik Ordahl 
Barna, Guzy & Steffen
eordahl@bgs.com

 

FEDERAL PRACTICE

JUDICIAL LAW

• Standing; mootness on appeal; dissent. Where the plaintiffs challenged a covid-related public health order in April 2020, the district court found that the plaintiffs lacked standing, the plaintiffs appealed and sought an injunction pending appeal (which was denied), the plaintiffs did not seek expedited review on the merits, the defendants moved to dismiss the appeal as moot, an 8th Circuit panel ordered that the motion be heard after full briefing on the merits, and the case was argued in April 2021, the majority of an 8th Circuit panel found that the plaintiffs had failed to allege a redressable injury, and alternatively held that the case was moot because the public health order had been superseded by a subsequent order. 

A vigorous dissent by Judge Stras argued that the plaintiffs had alleged sufficient facts to establish standing to pursue their claims, and that the case was not moot because further covid restrictions were possible. Hawse v. Page, 7 F.4th 685 (8th Cir. 2021). 

• Standing; credible threat of enforcement; dissent. Reversing a district court’s dismissal of an action for lack of standing, the 8th Circuit found that the plaintiffs had adequately alleged “a credible threat of enforcement” of a statute, enforcement of which was alleged to violate their 1st Amendment rights, rejecting the defendants’ argument that the plaintiffs were required to allege a “specific threat of enforcement” in order to establish standing. 

A dissent by Judge Shepherd argued that the plaintiffs had not established injury in fact, asserting that the plaintiffs’ fears of prosecution were “currently nothing more than the product of their own imagination.” Animal Legal Defense Fund v. Vaught, ___ F.4th ___ (8th Cir. 2021). 

•  Fed. R. App. P. 3(c); notice of appeal. In August 2021, this column noted the 8th Circuit dismissal of an appeal where the notice of appeal was deficient in numerous respects. 

In a case involving the same counsel and the same defendants, but different plaintiffs, the 8th Circuit determined that the notice of appeal was sufficient to establish appellate jurisdiction despite the fact that it purported to appeal from the “United States District Court for the Southern District of Missouri” to the “United States Court of Appeals for the Southern District of Missouri,” and stated that it appealed the “order granting monetary damages entered in this action on the 1st day of April, 2020.” Kohlbeck v. Wyndham Vacation Resorts, Inc., 7 F.4th 729 (8th Cir. 2021). Newcomb v, Wyndham Vacation Ownership, Inc., 999 F.3d 1134 (8th Cir. 2021). 

• Alleged improper and prejudicial closing argument; denial of motion for new trial affirmed. Where the defendant objected in advance to some of the plaintiffs’ closing argument PowerPoint, did not object to the closing argument itself, but later moved for a new trial, arguing that plaintiffs’ counsel’s closing argument was improper and prejudicial, the 8th Circuit found that the closing argument contained nothing “plainly unwarranted and clearly injurious” despite the fact that portions “crossed the line for permissible argument.” Mahaska Bottling Co. v. Bottling Grp., LLC, 6 F.4th 828 (8th Cir. 2021). 

•  Fed. R. Civ. P. 59(e); grant of motion for prejudgment interest affirmed. Rejecting the plaintiff’s argument that the defendants could not seek a post-judgment award of prejudgment interest pursuant to Fed. R. Civ. P. 59(e), the 8th Circuit “declined to impose [a] bright-line rule” that would prohibit Rule 59(e) requests for prejudgment interest, and instead determined that a district court has “discretion” to grant such a motion. Continental Indem. Co. v. IPFS of New York, LLC, 7 F.4th 713 (8th Cir. 2021). 

• Specific personal jurisdiction; tortious acts; Calder. The 8th Circuit affirmed a district court’s dismissal of an action for lack of personal jurisdiction, finding that the defendants’ letters and phone calls directed to the plaintiffs in Missouri were insufficient to establish personal jurisdiction absent evidence of “additional contacts” with the state. Morningside Church, Inc. v. Rutledge, ___ F.4th ___ (8th Cir. 2021). 

• Personal jurisdiction; defense not waived. Where the defendant alleged that certification of a collective action “would constitute a denial of [its] Due Process rights,” the 8th Circuit rejected appellant’s argument that this assertion was not clearly sufficient to preserve a personal jurisdiction defense, instead finding that the reference to due process “was sufficient to give the plaintiffs reasonable notice of the potential defense.” Vallone v. CJS Solutions Grp., ___ F.4th ___ (8th Cir. 2021). 

• Fed. R. App. P. 8 and 28(j); request for stay denied. The 8th Circuit denied the plaintiff’s letter request for a stay of its decision pending a decision by the Minnesota Supreme Court, finding that a Fed. R. App. P. 28(j) letter “is not a motion for a stay under Federal Rule of Appellate Procedure 8.” Godfrey v. State Farm Fire & Cas. Co., ___ F.4th ___ (8th Cir. 2021). 

• Denial of leave to amend affirmed; failure to comply with Local Rule 15.1. Affirming an order by Judge Ericksen, the 8th Circuit found no abuse of discretion in her denial of a motion to amend a complaint where the plaintiff twice failed to comply with Local Rule 15.1. Axline v. 3M Co., _ F.4th ___ (8th Cir. 2021). 

• Fed. R. Civ. P. 54(b); related claims still pending; appeal dismissed. In an unpublished opinion, the 8th Circuit dismissed an appeal from a judgment on one claim entered pursuant to Fed. R. Civ. P. 54(b) where related claims remained pending in the district court. Dinosaur Merchant Bank Ltd. v. Bancservices Int’l LLC, _ F. App’x ___(8th Cir. 2021). 

• Punitive damages; Fed. R. Civ. P. 15(a); Minn. Stat. §549.191. While he declined to decide whether a motion to amend to assert a claim for punitive damages was governed by Fed. R. Civ. P. 15(a)’s plausibility standard or Minn. Stat. §549.191’s prima facie standard, Chief Judge Tunheim granted a motion to dismiss an “improperly included” claim for punitive damages where that claim was asserted in the initial complaint. Bergman v. Johnson & Johnson, 2021 WL 3604305 (D. Minn. 8/13/2021). 

Josh Jacobson
Law Office of Josh Jacobson 
joshjacobsonlaw@gmail.com

 

IMMIGRATION LAW

JUDICIAL LAW

•  Migrant Protection Protocols (MPP) to remain in place pending ongoing litigation. In August U.S. District Court Judge Matthew Kacsmaryk, Northern District of Texas, issued a nationwide injunction ordering the Biden administration to reinstate the preceding administration’s Migrant Protection Protocols (MPP) (remain in Mexico) program. According to Judge Kacsmaryk, the Biden administration’s termination of MPP violated the Administrative Procedure Act (APA) (5 U.S.C. §706(2)(A) because the Department of Homeland Security (DHS) ignored certain key factors while at the same time providing arbitrary reasons for rescinding MPP and failing to consider the effect of its termination on compliance with 8 U.S.C. §1225. The decision was stayed for seven days, allowing the Biden administration to seek emergency relief at the appellate level. Texas, et al. v. Biden, et al., No. 2:21-cv-00067-Z (N.D. Tex. 8/13/2021). https://www.govinfo.gov/content/pkg/USCOURTS-txnd-2_21-cv-00067/pdf/USCOURTS-txnd-2_21-cv-00067-0.pdf

On 8/19/2021, the 5th Circuit Court of Appeals declined to grant the government’s request for a stay of Judge Kacsmaryk’s order pending appeal. Texas, et al. v. Biden, et al., No. 21-10806 (5th Circuit, 8/19/2021). https://www.ca5.uscourts.gov/opinions/pub/21/21-10806-CV0.pdf 

On 8/24/2021, the U.S. Supreme Court denied the Biden administration’s request for a stay of Judge Kacsmaryk’s order pending completion of appellate proceedings on the matter. Biden, et al. v. Texas, et al., 594 U.S. ___ (2021). https://www.supremecourt.gov/orders/courtorders/082421zr_2d9g.pdf 

•  Petitioner’s vagueness challenge to 8 U.S.C. §1231(b)(3)(B)(ii) is unfounded. The 8th Circuit Court of Appeals held the petitioner’s challenge of 8 U.S.C. §1231(b)(3)(B)(ii)’s non-per se “particularly serious crime” term (PSC) as unconstitutionally vague (for allegedly giving “the executive and judicial branches free rein to label any conviction a PSC”) was unfounded. “The statute’s text, while ambiguous, does more than apply to a crime’s imagined, ordinary case. Cf. Davis, 139 S. Ct. at 2326. Because its text imposes standards that must reference underlying facts, the statute stands.” Mumad v. Garland, No. 20-2140, slip op. (8th Circuit, 8/27/2021). https://ecf.ca8.uscourts.gov/opndir/21/08/202140P.pdf

• No impermissible fact finding nor misapplication of legal standard in CAT claim. The 8th Circuit Court of Appeals held that the Board of Immigration Appeals (BIA) neither engaged in impermissible fact-finding nor applied an incorrect legal standard to the petitioner’s Convention Against Torture (CAT) claim when it reversed the immigration judge’s finding that the petitioner would more likely than not be tortured in Somalia. As such, the BIA correctly found the immigration judge’s factual conclusions were “clearly erroneous because they were based on a hypothetical chain of occurrences and not a plausible view of the facts and record in the case.” Mohamed v. Garland, No. 20-1829, slip op. (8th Circuit, 8/13/2021). https://ecf.ca8.uscourts.gov/opndir/21/08/201829P.pdf

• BIA erred in failing to apply Matter of Sanchez Sosa factors in U visa applications. The 8th Circuit Court of Appeals granted the petition for review of the Board of Immigration Appeals’ (BIA) denial of the petitioners’ motion to reopen, finding the BIA abused its discretion when it departed from established policy by failing to apply the Matter of Sanchez Sosa factors. Those factors are: “(1) the DHS’s response to the motion to continue; (2) whether the underlying [U] visa petition is prima facie approvable; and (3) the reasons given for the continuance and other procedural considerations.” Gonzales Quecheluno v. Garland, No. 20-2200, slip op. (8th Circuit, 8/12/2021). https://ecf.ca8.uscourts.gov/opndir/21/08/202200P.pdf 

• No abuse of discretion in denial of petitioner’s motion to reopen on account of changed country conditions. The 8th Circuit Court of Appeals held that the Board of Immigration Appeals (BIA) did not abuse its discretion when it denied the petitioner’s motion to reopen, where the evidence showed the poor conditions facing homosexuals and Christians in Somalia had remained substantially the same since the time of her hearing. Yusuf v. Garland, No. 20-2316, slip op. (8th Circuit, 8/9/2021). https://ecf.ca8.uscourts.gov/opndir/21/08/202316P.pdf 

• No particular social group: “Mexican mothers who refuse to work for the cartel.The 8th Circuit Court of Appeals held that the Board of Immigration Appeals (BIA) did not err when it found the petitioner’s proposed particular social group (PSG)—“Mexican mothers who refuse to work for the Cartel” [Cartel Jalisco Nueva Generación]—was neither sufficiently particularized nor socially distinct. Rosales-Reyes v. Garland, No. 20-2417, slip op. (8th Circuit, 8/4/2021) https://ecf.ca8.uscourts.gov/opndir/21/08/202417P.pdf 

• No error in excluding petitioner’s mental health issues from particularly serious crime analysis. The 8th Circuit Court of Appeals found that the Board of Immigration Appeals (BIA) did not err when it failed to consider the petitioner’s mental health as a factor in its particularly serious crime (PSC) analysis (involving unlawful trafficking in controlled substances). The petitioner failed to rebut the presumption set out in In re Y-L-, 23 I&N Dec. 270 (A.G.) that unlawful trafficking in controlled substances is a particularly serious crime. Gilbertson v. Garland, No. 20-2355, slip op. (8th Circuit, 8/2/2021). https://ecf.ca8.uscourts.gov/opndir/21/08/202355P.pdf 

• No violation in substituting immigration judges during different phases of the removal proceeding. The 8th Circuit Court of Appeals held that the issuance of a decision denying the petitioner’s cancellation of removal application by an immigration judge different from the one conducting his merits hearing did not rise to the level of a violation of due process nor the text of 8 U.S.C. §1229a(c)(1)(A). Orpinel-Robledo v. Garland, No. 20-2624, slip op. (8th Circuit, 7/19/2021). https://ecf.ca8.uscourts.gov/opndir/21/07/202624P.pdf

• Vacated and remanded: BIA’s decision finding petitioner’s Iowa conviction for enticing a minor is a “crime of child abuse.” The 8th Circuit Court of Appeals vacated and remanded the Board of Immigration Appeals’ decision that the petitioner was removable because his conviction for enticing a minor was a violation of Iowa Code §710.10(3) constituting a “crime of child abuse.” The crime of enticement under Iowa law is not, however, an exact match with that under federal law. “Looking only at the plain text of the Iowa statute, we cannot exclude the possibility that an offender could be prosecuted for enticing a minor with intent to commit disorderly conduct or harassment upon a minor.” Pah Peh v. Garland, No. 20-1508, slip op. (8th Circuit, 7/16/2021). https://ecf.ca8.uscourts.gov/opndir/21/07/201508P.pdf 

• Unlawful: U.S. government’s practice of turning away asylum seekers at ports of entry along the southern border. In early September U.S. District Judge Cynthia Bashant, Southern District of California, declared the government’s practice of denying asylum seekers access to the asylum process at ports of entry (POEs) along the U.S.-Mexico border was unlawful. The court ruled that Customs and Border Protection (CBP) officers must, by law, inspect asylum seekers upon their arrival at ports of entry and refer them for asylum interviews, not turn them back to Mexico under the rationale that the ports are “at capacity” (otherwise known as “metering” or “queue management,” whereby a certain number of individuals are allowed to formally request asylum at a port of entry on a given day and thus begin the asylum process). [This is to be distinguished from the aforementioned Migrant Protection Protocols (MPP) where one, even after having been allowed to formally request asylum at a port of entry on a given day under “metering,” is turned back to wait in Mexico for their asylum case to be heard.] Judge Bashant granted the plaintiffs’ motion for summary judgment as it related to their claims for violations of the Administrative Procedure Act (APA) (5 U.S.C. §706(1) and the 5th Amendment’s due process clause. “[T]he record contains undisputed evidence that in 2016, 2017, and 2018, CBP officers did not carry out their discrete statutory duties to inspect and refer asylum seekers to start the asylum process once they arrived at POEs; instead, defendants stationed CBP personnel at the limit line to “turn away” or “push back” asylum seekers as they reached POEs.” She also ordered the submission of supplemental briefs regarding the appropriate remedy in this action by 10/1/2021. Al Otro Lado, et al. v. Mayorkas, et al., No. 3:17-cv-02366-BAS-KSC (S.D. Cal. 9/2/2021). https://www.govinfo.gov/content/pkg/USCOURTS-casd-3_17-cv-02366/pdf/USCOURTS-casd-3_17-cv-02366-40.pdf 

ADMINISTRATIVE ACTION

• Extension of TPS for El Salvador, Haiti, Honduras, Nepal, Nicaragua, and Sudan to 12/31/2022. In September the Department of Homeland Security issued notice of the automatic extension of temporary protected status (TPS) designations for El Salvador, Haiti, Honduras, Nepal, Nicaragua, and Sudan through 12/31/2022 from the current expiration date of 10/4/2021. TPS beneficiaries from the countries will retain their status, provided they continue to meet all the individual TPS eligibility requirements. Beneficiaries under the TPS designations for El Salvador, Nicaragua, Sudan, Honduras, and Nepal will retain their TPS status while the preliminary injunction in Ramos and the Bhattarai orders remain in effect. Likewise, beneficiaries under the TPS designation for Haiti will retain their TPS while either of the preliminary injunctions in Ramos or Saget remain in effect. 86 Fed. Register, 50725-33 (9/10/2021). https://www.federalregister.gov/documents/2021/09/10/2021-19617/continuation-of-documentation-for-beneficiaries-of-temporary-protected-status-designations-for-el 

R. Mark Frey
Frey Law Office
rmfrey@cs.com


INTELLECTUAL PROPERTY

JUDICIAL LAW

• Copyright: Home floorplans not artistic “pictures” under §120(a) of the Copyright Act. A panel of the United States Court of Appeals for the 8th Circuit recently reversed a district court’s award of summary judgment to defendants, holding that 17 U.S.C.S. §120(a) was not a defense to copyright infringement. Plaintiff Charles James and his company Designworks Homes, Inc. build homes using a certain “triangular atrium design with stairs.” Owners of homes with such atria hired real estate agents and companies to help sell their homes. The agents then hired contractors to measure and create computer-generated floorplans of the homes for potential buyers to consider. Plaintiffs sued the real estate companies and agents alleging that the defendants infringed plaintiffs’ copyrights when defendants created and published the floorplans without authorization. Defendants moved for summary judgment, contending that 17 U.S.C.S. §120(a) was a defense to the accused infringement. Section 120(a) states, “The copyright in an architectural work that has been constructed does not include the right to prevent the making, distributing, or public display of pictures, paintings, photographs or other pictorial representations of the work, if the building in which the work is embodied is located in or ordinarily visible from a public place.” The district court agreed finding the floorplans were “pictorial representations” of the homes. On appeal, the panel reversed. The court held that floorplans were more properly described as “technical drawings” or “architectural plans” under 17 U.S.C. §101 of the Copyright Act than as “pictures” or “pictorial representations” of architectural works under 17 U.S.C. §120(a). The court also found that “pictorial representations” must be read to require an artistic expression of the architectural works. The floorplans at issue were agreed to be for “practical purposes,” not “artistic purposes.” Accordingly, §120(a) was not a defense to defendants’ alleged unauthorized publication of the floorplans. Designworks Homes, Inc. v. Columbia House of Brokers Realty, Inc., Nos. 19-3608, 20-1099, 20-3104, 20-3107, 2021 U.S. App. LEXIS 24381 (8th Cir. 8/16/2021).

•  Patent: Alleging false marking requires pleading deceptive intent with specificity under Fed. R. Civ. P. 9(b). Judge Nelson recently dismissed defendant’s false marking counterclaim under Federal Rule of Civil Procedure 12(b)(6). Plaintiff Wing Enterprises, Inc., dba Little Giant Ladder Systems, sued defendant Tricam Industries, Inc. Little Giant again asserted patent infringement claims against Tricam. Tricam alleged a counterclaim of false marking under 35 U.S.C. §292 (Count III). Tricam alleged that Little Giant’s Rapid Lock multi-position ladders were not covered by any claim of the ’416 Patent and that Little Giant falsely marked its Rapid Lock ladders as patented under the ’416 Patent, even though it knew otherwise. Little Giant moved to dismiss, arguing Tricam had not adequately pleaded deceptive intent. The court found that the particularity requirement of Rule 9(b) applies to false marking claims under 35 U.S.C. §292. Tricam argued it was entitled to a presumption of deceptive intent because the combination of a false statement and knowledge of its falsity creates a rebuttable presumption of intent to deceive the public. The court rejected this argument because Tricam simply compared the claims of the patent-in-suit to Little Giant’s products. This was distinguishable from other cases where a rebuttable presumption was found when patent enforcement actions were abandoned and patent labels from certain products were removed. The court found Tricam’s allegations that Little Giant is a sophisticated company, with experience in applying for and litigating its patents, to be conclusory. The court further found that any inconsistencies in Little Giant’s advertising (i.e. not advertising the ladders at issue as patented while advertising other products as patented) did not give rise to a strong inference of fraudulent intent. Accordingly, the court found that Tricam’s false marking allegations failed to plead fraud with particularity and failed to state a claim. Counterclaim Count III was dismissed. Wing Enters., Inc. v. Tricam Indus., Inc., No. 20-cv-2497 (SRN/ECW), 2021 U.S. Dist. LEXIS 153735 (D. Minn. 8/16/2021).

Joe Dubis
Merchant & Gould
jdubis@merchantgould.com

TAX LAW

JUDICIAL LAW

• Section 278 exclusive means for challenging assessment when challenge is within statute; retailer’s claims dismissed. Walmart alleged that several counties discriminated against Walmart in the counties’ tax assessments. Such discrimination, Walmart asserts, violates the equal protection clause and Walmart’s right to uniformity in taxation. Walmart raised these claims in district court, and outside of Minnesota’s statutory structure permitting assessment challenges. That statute, Chapter 278, provides the “exclusive remedy” for bringing challenges if the challenge falls within the scope of one of five specified statutory grounds. Chapter 278 requires challenges to be brought in the year the tax becomes payable. Walmart did not bring its claims in the year the taxes were due, and therefore the claims were untimely if Chapter 278 applies. 

The Court articulated the central question before it as whether “Walmart’s claims that the Counties willfully, intentionally, and unlawfully discriminated against the company in violation of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and the Uniformity in Taxation Clause of Article X, section 1, of the Minnesota Constitution fall within the scope of chapter 278, such that Walmart is subject to the limitations period set forth in section 278.01?” The Court answered that question in the affirmative and Walmart’s claims were dismissed because they were not brought within the statute’s limitations period. Walmart Inc. v. Winona Cty., No. A19-1877 ___ N.W.2d ___ (Minn. 8/18/2021).

• Sales tax not duplicative of annual personal property tax on aircraft. Jeffrey Sheridan and Kirk Lindberg separately purchased aircraft outside of Minnesota. Each paid two separate taxes: a use tax and an annual tax. The use tax is a one-time excise tax imposed on the purchase (had the purchase been in-state, we would refer to the tax as a sales tax). The sales and use tax must be paid before an aircraft can be registered in the state. The annual tax, on the other hand, is “imposed for the privilege of operating aircraft in the airspace of Minnesota.” The aircraft purchasers paid both taxes, then each asked for a refund of the use tax payments, arguing that the use tax payment is unconstitutional under article X, section 5 of the Minnesota Constitution. 

Article X, section 5 of the Minnesota Constitution allows the Legislature to tax aircraft using the airspace over Minnesota “in lieu of all other taxes.” Sheridan and Lindberg argue that the “in lieu of” language in Article X, section 5, restricts the Legislature from imposing any additional tax on aircraft. The constitutional language provides that “[t]he legislature may tax aircraft using the air space overlying the state on a more onerous basis than other personal property. Any such tax on aircraft shall be in lieu of all other taxes.” (Emphasis added.) Sheridan and Lindberg argued that the broad language “unambiguously restricts the Legislature’s taxing authority to just one tax on aircraft for all purposes, in place of all other potential taxes.” The commissioner countered that the in-lieu-of language was intended to limit only other personal property taxes on aircraft, not all other taxes regardless of type of tax. The commissioner pointed to the preamble language of the session law and argued that the context of the tax landscape at the time of the passage supported the commissioner’s interpretation. 

The Court turned to the rules of statutory construction to interpret the provision in a manner consistent with the Legislature’s intent. The Court also noted its obligation to “effectuate the intent of ‘the people who ratified’ the constitutional provision at issue.” 

The Court began by concluding that the language of article X, section 5 is ambiguous, which permitted the Court to then consider the “the circumstances under which the Aircraft Amendment was enacted, legislative history, and the occasion, necessity, and object to be attained by its passage” to determine the meaning of the phrase “any other taxes.” This consideration led the Court to “conclude that the phrase ‘all other taxes’… means ‘all other personal property taxes.’” The Court went on to hold “that the in-lieu clause of the Aircraft Amendment… prohibits only the imposition of duplicative personal property taxes on aircraft.” With this holding, the Court was left to decide whether the use tax is a personal property tax that would be prohibited by article X, section 5. 

The Court ultimately “agree[d] with the Commissioner and the Tax Court that section 297A.82 imposes an excise tax on sales and purchases of aircraft. Because it is not a personal property tax on aircraft, we hold that it is does not violate the in-lieu-of clause in article X, section 5 of the Minnesota Constitution.” Sheridan v. Comm’r, No. A21-0007, 2021 WL 3745173, ___ NW2d ___ (Minn. 8/25/2021). 

• Prior bankruptcy proceeding does not bar deficiency determination. A former bankruptcy attorney failed to file income taxes for 2010 or 2011. He eventually filed the returns in 2013. After the taxes were due, but before he filed his returns, the taxpayer filed for chapter 13 bankruptcy. The taxpayer’s chapter 13 plan listed the IRS priority claim, and in December 2017 the taxpayer was granted a discharge of debts. The order of discharge noted that some debts were not discharged, and it listed, as an example of non-discharged debts, debts for taxes specified in 11 U.S.C. sec. 523(a)(1)(B). 

The taxpayer argued that the commissioner is precluded from pursuing a deficiency case by res judicata, collateral estoppel, and judicial estoppel because his chapter 13 plan—which included the IRS’ priority claim for the years in issue—was confirmed by the bankruptcy court. The tax court rejected this argument. Although bankruptcy cases could have preclusive effect, no estoppel was appropriate here because “the facts underlying the deficiency proceeding—petitioner’s tax items for each year—were not raised or litigated in the plan confirmation proceeding.” The court reasoned that judicial estoppel was similarly inappropriate because the taxpayer “does not identify how the IRS’ proof of claim in his chapter 13 bankruptcy is completely contradictory to its determination of deficiencies in this case.” The court went on to address the merits of the deficiency claim and held for the commissioner. Wathen v. Comm’r, T.C.M. (RIA) 2021-100 (T.C. 2021).

Morgan Holcomb 
Mitchell Hamline School of Law
morgan.holcomb@mitchellhamline.edu 

Sheena Denny
Mitchell Hamline School of Law
sheena.denny@mitchellhamline.edu

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